In insurance matters, litigation privilege is a frequent principle of law raised by litigators to deny the disclosure of documents. On February 2, 2023, Justice Daniel Dumais of the Superior Court of Quebec adjudicated an objection based on this particular privilege.
The context
The lawsuit was instituted by a subrogatory insurer further to a fire, which occurred on February 12, 2019, in the City of Saint-Prosper in Beauce, Quebec. The City was indemnified by its insurer, which sued two defendants, including Propane G.R.G. Inc. (“G.R.G.”). Michel Gagné, an employee of G.R.G., was filling propane tanks located outside the arena when the explosion occurred.
The objection
During Michel Gagné’s pre-trial deposition, multiple undertakings were requested, including the communication of an internal email sent on the day of the incident at 3:49 p.m. by Patrice Breton, G.R.G.’s vice-president, to Sylvain Bilodeau, G.R.G.’s director (“Email #1”).
Email #1 was sent further to a meeting between Patrice Breton and Michel Gagné with respect to the incident. The content of Email #1 was relayed the same day, at 5:09 p.m., by Patrice Breton to G.R.G.’s insurance broker (“Email #2”). The latter then notified the insurer of its content.
While acknowledging the existence of Email #1, G.R.G. objected to its disclosure due to the privileged nature of the document, more specifically the protection of the litigation privilege. G.R.G. made a similar objection in regards to Email #2 forwarded to the broker at 5:09 p.m. The plaintiff eventually withdrew the request for disclosure of Email #2.
Relying on the written statement of its director Sylvain Bilodeau, G.R.G. argues that Email #1 was specifically prepared in the context of contemplated litigation, due to the circumstances and the significance of the loss. The approach was primarily intended for G.R.G.’s insurer, which would eventually have to defend G.R.G. against a claim. In addition, the privileged nature of Email #2 addressed to the broker was recognized by the parties. The two (2) documents are closely related. Consequently, if one recognizes that Email #2 is protected, so should be Email #1.
The plaintiff argued that the written statement of Sylvain Bilodeau does not suggest that the main purpose of Email #1 was to prepare for future litigation, but rather to explain the facts and circumstances of the loss. Email #1 does not refer to the insurer, nor does it set out any strategy or position.
The law
Justice Dumais stresses that litigation privilege has been the subject of numerous debates before the Courts in Canada, hence the Supreme Court of Canada’s Blank decision.[1]
The purpose of litigation privilege is to ensure the effectiveness of the adversarial process and to create a zone of privacy in relation to pending or apprehended litigation. In order for a document to be protected by litigation privilege, the Supreme Court has held as an essential condition that the main purpose of the document must relate to the preparation of litigation.
Litigation privilege is interpreted restrictively, contrary to the solicitor-client privilege. The burden of proof relies on the party which raises the litigation privilege and the protection of the document. Once the evidence shows that the document was indeed related to the preparation of an existing or contemplated litigation, a legal presumption of inadmissibility is established and the document is protected from disclosure, unless an exception applies to lift the privilege, such as a clear and unequivocal waiver of privilege.
The analysis
The Court notes that the plaintiff sent to G.R.G., as early as 15 days after the loss, a letter advising that an investigation was undergoing and that G.R.G.’s liability could be exposed. Thus, the Court considers that G.R.G. was right to apprehend litigation on the day of the loss, when Email #1 was sent.
In addition, after studying both Emails #1 and #2, the Court accepts the argument put forward by G.R.G. in regards to the interconnected nature of the documents. The Court writes that both are to the same effect and one cannot be circumvented by the other. Of course, G.R.G. wanted to know what happened on the day of the loss, but also wanted to prepare for future litigation and inform the insurer. Otherwise, what was the purpose of the correspondence to the broker and the insurer, which relied on Email #1?
The Court adds that there was no waiver of the privilege. Moreover, G.R.G.’s employee will be available for questioning at trial.
Consequently, the Court concludes that Email #1 is protected and that the objection is well founded.
Conclusion
This decision is interesting for insurers doing business in Quebec considering the zone of confidentiality that it creates not only with respect to the communications between the insured and the insurer after a loss, but also regarding the internal communication used by the insured to gather the facts to be transmitted to the insurer in the context of contemplated litigation.
It may therefore be worthwhile for insureds to include their brokers or insurers as early as possible in their internal communications following a loss that may give rise to a claim, as this will create a zone of confidentiality allowing the insured and its insurer to prepare the defence case. This decision favours full disclosure of the facts and circumstances of a loss in a spontaneous manner without the fear of future interference from the adverse party, which is of great benefit to the insurer’s investigation.
[1] Blank v. Canada (Minister of Justice), 2006 SCC 39.
